The Private and Social Costs of Patent Trolls
James E. Bessen
Boston University - School of Law; Research on Innovation
Michael J. Meurer
Boston University - School of Law
Jennifer Laurissa Ford
affiliation not provided to SSRN
September 19, 2011
Boston Univ. School of Law, Law and Economics Research Paper No. 11-45
In the past, non-practicing entities (NPEs) - firms that license patents without producing goods - have facilitated technology markets and increased rents for small inventors. Is this also true for today’s NPEs? Or are they “patent trolls” who opportunistically litigate over software patents with unpredictable boundaries? Using stock market event studies around patent lawsuit filings, we find that NPE lawsuits are associated with half a trillion dollars of lost wealth to defendants from 1990 through 2010, mostly from technology companies. Moreover, very little of this loss represents a transfer to small inventors. Instead, it implies reduced innovation incentives.
Number of Pages in PDF File: 35
Keywords: patent, litigation, litigation cost, non-practicing entities, software patents
JEL Classification: O31, O34, K41
Date posted: September 19, 2011 ; Last revised: September 30, 2012
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